THE ENTREPRENEURIAL JOURNEY AND ITS IMPACT ON PRIVATE WEALTH - BNP PARIBAS ENTREPRENEUR REPORT / 2019
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BNP PARIBAS
ENTREPRENEUR REPORT / 2019
PART II
THE ENTREPRENEURIAL
JOURNEY AND ITS IMPACT
ON PRIVATE WEALTH
CONTENTS
p.2 Editorial
41
SECTION 2 / THE SUCCESSION
QUESTION
p.4 Research Methodology
& Sampling p.42 Making Way for the Next Generation
p.5 Contributors p.46 In conversation with Martine Reynaers
p.6 Key Findings p.48 A Blended Approach to Leadership
Preparation
p.52 In conversation with
Cindy Galardi Culpepper
p.54 Protecting Financial Value
9
and Personal Wealth
p.58 A Legacy of Good Governance
p.60 In conversation with Benoît Frin
SECTION 1 / FROM IDEATION
TO IPO – THE BUSINESS
LIFECYCLE
p.62 In Conclusion
p.10 Spotlight on the Lifecycle
of a Successful Firm
p.16 Stage One: Creation
p.22 Stage Two: Growth
65
p.26 Stage Three: Development
p.34 Stage Four: Consolidation
p.36 Stage Five: Transfer
COUNTRY SNAPSHOTS
p.88
About Us
EDITORIAL
In a world that is ever-changing,
entrepreneurs seek to build their strategy
with a partner they trust. At BNP Paribas
Wealth Management, we are able to serve
them through a holistic approach across
Europe, Asia and the United States, whether
by helping them grow their company or
by managing their personal wealth.’
Sofia Merlo Vincent Lecomte
WELCOME
TO OUR 2019 GLOBAL ENTREPRENEUR REPORT.
For the fifth consecutive year, we have strived to uncover the impact on the global
economy of 2,763 business owners from 23 different markets. In the first of our two-
part series released in fall 2018, we spotlighted entrepreneurial investments and
trends. In this second part, we examine how entrepreneurs unlock growth, be it through
a merger, an acquisition or organically.
Equally important is when they step back from their business. Most have identified
a successor and they are committed to providing them with guidance and training to
succeed. Many will put in place a governance framework to clarify the future strategy of
their firm.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
2
This report demonstrates again that Elite Entrepreneurs have specific needs depending
on where their business lifecycle stands. When entrepreneurs face the decision to
transfer or sell their business, succession planning and family governance are top of
mind and they can rely on our experts to accompany them. Our ‘NextGen Experience’
in Paris, Hong Kong and in the Silicon Valley, prepares millennials to take leadership
positions in their family businesses or develop their own entrepreneurial ventures.
We accompany some of the world’s most demanding entrepreneurs. As a responsible
Private Bank serving the economy, our objective has always been to improve our own
understanding to better support entrepreneurs in their personal and professional
wealth creation strategies, bringing them solutions across the entire BNP Paribas
Group.
This is the purpose of our report.
Sofia Merlo Vincent Lecomte
Co-CEO BNP Paribas Co-CEO BNP Paribas
Wealth Management Wealth Management
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
3
RESE ARCH METHODOLOGY & SAMPLING
T
he research program was undertaken
AGE
by Scorpio Partnership (an Aon company)
during Q3, 2018. The audience of participants
was high net worth and ultra-high net worth 36 TO 54
investors that owned businesses. 35 AND
UNDER
The research methodology involved an online 52%
survey program with 2,763 participants spanning
23 countries. In addition, Scorpio Partnership 37%
conducted in-depth interviews with entrepreneurs 55 AND OVER
and industry experts in the US, Europe and Asia.
2,763 11%
TOTAL SAMPLE
ON AVERAGE GENDER
USD16 BN
TOTAL NET WORTH
USD5.8 M
NET WORTH
67% MALE
33%
FEMALE
2.8
COMPANIES STARTED
REGIONS
COUNTRIES COVERED:
Belgium, Brazil, China, France, Germany,
Gulf Cooperation Council (GCC), Hong Kong, 14%
India, Indonesia, Italy, Luxembourg,
30%
51%
USA
Netherlands, Poland, Russia, Singapore,
Spain, Switzerland, Taiwan, Turkey, APAC
United Kingdom and United States EUROPE
3%
BRAZIL
2%
GCC
Throughout this report, we use the following definitions:
• High net worth (HNW) entrepreneur: Entrepreneur with investable assets valued between USD10 million and USD25 million.
• Ultra-high net worth (UHNW) entrepreneur: Entrepreneur with investable assets valued at USD25 million or more.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
4
CONTRIBUTORS
BENOÎT FRIN MARTINE REYNAERS
Estate Planning and Managing Director
Lending Director @Reynaers Group
@BNP Paribas Fortis
Private Banking
CINDY GALARDI TASHA VASHISHT
CULPEPPER Senior Manager
CEO and Chairman @Scorpio Partnership
@Galardi Group (an Aon company)
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
5
KEY FINDINGS
Almost half of global Elite entrepreneurs
are in the early stages of their journey
47% are in the ‘Creation’ or ‘Growth’ phases, where the
objective is to launch a product or service, or grow revenues
(Tech and Engineering are the top sectors respectively for
56%
have experienced M&A of a business
these stages). The remainder are aiming to improve profits More than half of entrepreneurs have been
or productivity (particularly in Professional Services, through a merger or acquisition with one of
Transport and Logistics) or planning an exit. their firms in the past. Those in Turkey and
Brazil are most likely to have had a
business acquired in the last five years,
while Poland, India and China are hotspots
One in four entrepreneurs is a for recent mergers.
‘DISRUPTOR’
While innovation is the five-year ambition
for many entrepreneurs, 24% hope to have
developed a new product that ‘disrupts
their chosen sector’. The typical ‘Disruptor’
is 39 years old, lives in Belgium, Taiwan or
the Netherlands, and works in Tech,
Engineering or Manufacturing.
business
In hindsight,
strategy support
44%
have used credit
solutions to develop
is considered critical for successful M&A
‘Growth of market share’, ‘sector
diversification’ and ‘accessing new markets’
are the most common triggers for M& A
their businesses activity. Half of those who have been
The demand is highest in Asia, where 55% have borrowed to through this experience say establishing
invest in their own businesses, rising to six in every ten their business strategy, and having the
entrepreneurs in China, India and Indonesia. Those in the right team in place, were vitally important.
‘Development’ stage are most likely to rely on lending for
business financing purposes.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
6
More than one in three
BABY BOOMER More than
ENTREPRENEURS
is preparing to exit
7% of global entrepreneurs are anticipating an
half
feel the next
generation
imminent sale or business exit, rising to 34% of
those over the age of 55. ‘Implementing a plan of business leaders need
to preserve wealth’ and ‘finding the right time more guidance
to sell’ are the chief concerns before an exit 53% of Elite entrepreneurs believe their
(each is a priority for 41%). successors are not ready to take over their
responsibilities; a further 13% have not
even identified anyone suitable. However,
Most entrepreneurs intend for their business 47% of UHNWIs are fully confident in the
to stay in future leaders of their firms. Overall, 92%
the family
of entrepreneurs would value succession
planning from their wealth managers
to prepare the next generation.
51% say that their plan is for ownership of their
business to eventually pass to a family member:
their top three reasons are to safeguard the firm’s
financial value, trust in the next generation to
develop the business and wanting to preserve core FAMILY
values. Those in Poland, Italy, Russia, Brazil and
Indonesia are most convinced of this approach.
GOVERNANCE
will help different generations
reach a consensus on strategy
Almost a third (29%) of entrepreneurs will
However, family transfer implement a family governance code before
they relinquish their responsibilities.
becomes less appealing when
A code fulfils two important objectives:
entrepreneurs approach exit
smooth integration of family members into
As many as 62% of entrepreneurs in the the firm and definition of the long-term
‘Creation’ stage say they will pass on business plan.
company interests to a family member.
However, this falls to just 37% as they
approach exit and other options, such as
a management buy-out or sale to a new
owner, also become attractive.
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
7
SECTION 1 F R O M I D E AT I O N TO I P O THE BUSINESS LIFECYCLE
FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
SPOTLIGHT ON
THE LIFECYCLE
OF A SUCCESSFUL FIRM
CREATION
Criteria of Lifecycle Stage:
Entrepreneurs with a main business
objective in 2018 to launch a new
product, concept or service line
1
STAGE
TRANSFER GROWTH
Criteria of Lifecycle Stage: Criteria of Lifecycle Stage:
Entrepreneurs with a main
5 2 Entrepreneurs with a main
STAGE
STAGE
business objective in 2018 to business objective in 2018 to
exit from their primary business grow sales or revenues relative
to the previous year
4 3
STAGE
STAGE
CONSOLIDATION DEVELOPMENT
Criteria of Lifecycle Stage: Criteria of Lifecycle Stage:
Entrepreneurs with a main business Entrepreneurs with a main business
objective in 2018 to consolidate their objective in 2018 to increase profitability,
business and prepare for exit efficiency or productivity relative to the
previous year
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
101
STAGE
CREATION
PROFILING DEEP-DIVE
Population
21% of entrepreneurs aged 35 and under are at the ‘Creation’ stage
460 Elite
Entrepreneurs of the business lifecycle, compared to only 6% aged 55 and over.
(17% of total sample)
26% of UHNW entrepreneurs with net worth equal to or greater
than USD25 million indicate that they are at the ‘Creation’ stage of
Average age
37 years old the business lifecycle.
Average Company
Revenue in 2017
USD6.4 million
TOP SECTOR HOTSPOTS TOP 5 MARKET HOTSPOTS
SUCCESSION PLAN 1 IT and digital 25% 1 Russia 30%
technology
1 Ownership will pass 62%
2 Indonesia 29%
to a family member 2 Retail and culture 17%
2 Ownership will pass 29%
3 China 25%
to the management
team
3 Transport and logistics 17%
3 Ownership will pass 9% 4 GCC 23%
to a new owner 4 Manufacturing and 15%
engineering
5 Poland 23%
5 Financial services 13%
FUTURE BUSINESS INVESTMENTS
6 Professional services 13%
(e.g. medical, legal)
1 Product design 42%
2 Product 38% SUCCESSION ADVICE
manufacturing
1 Advice on how to 41% 5 Wealth management 31%
3 Marketing 34%
prepare future leaders after the transfer or
for senior leadership sale of my business
4 Sales and 32% responsibilities
6 Facilitation during 29%
distribution
2 Advice on the correct 39% meetings to smooth
5 Customer experience 30% valuation of the
business
the transfer
(e.g. website)
7 Putting in place 25%
6 Mobile 26% 3 Support finding people 38% a family governance
communications with the right skills and code for the next
experience to manage generation of leaders
7 Finance (e.g. 23%
the business
accounting, payments)
4 Advice on structuring 32%
the transfer to optimise
tax efficiency
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
11FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
2
STAGE
GROWTH
PROFILING DEEP-DIVE
Population
Only 34% of entrepreneurs in the ‘Growth’ stage believe
844 Elite
Entrepreneurs that the next generation of business leaders are fully prepared
(31% of total sample) for future management, compared with 50% of ‘Creation’ stage
business owners.
Average age
39 years old
More than one in two Growth stage entrepreneurs believe that a
family governance code could help define the future role of family
Average Company members and help integrate them into the business, while also
Revenue in 2017 helping to set up a long-term strategic business plan for the future.
USD6.4 million
TOP SECTOR HOTSPOTS TOP 5 MARKET HOTSPOTS
SUCCESSION PLAN 1 Manufacturing 33% 1 Luxembourg 59%
and engineering
1 Ownership will pass 50%
2 Belgium 48%
to a family member 2 Transport 31%
and logistics
2 Ownership will pass 36%
3 Poland 40%
to the management
team
3 Retail and culture 30%
3 Ownership will pass 14% 4 Spain 38%
to a new owner 4 Professional services 30%
(e.g. medical, legal)
5 Indonesia 37%
5 IT and digital 30%
technology
FUTURE BUSINESS INVESTMENTS
6 Financial services 26%
1 Sales and distribution 40%
2 Marketing 39% SUCCESSION ADVICE
1 Advice on the correct 44% 5 Wealth management 32%
3 Customer experience 34%
valuation of the after the transfer or
(e.g. website) business sale of my business
4 Product design 31%
2 Advice on how to 37% 6 Putting in place a 30%
prepare future leaders family governance
5 Product manufacturing 28% for senior leadership
responsibilities
code for the next
generation of leaders
6 Finance 27% 3 Support finding people 37% 7 Facilitation during 30%
(e.g. accounting, with the right skills meetings to smooth
payments) and experience to the transfer
manage the business
7 Mobile communications 22%
4 Advice on structuring 34%
the transfer to optimise
tax efficiency
Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
123
STAGE
DEVELOPMENT
PROFILING DEEP-DIVE
Population
In terms of future business goals, the majority of ‘Development’
1,262 Elite
Entrepreneurs stage entrepreneurs (16%) want to contribute to innovation and
(46% of total sample) development in their chosen industry.
26% of ‘Development’ stage entrepreneurs believe that automation
Average age
40 years old will help transform their business in the next five years, compared
to only 19% of their peers in the ‘Growth’ stage.
Average Company
Revenue in 2017
USD7.5 million
TOP SECTOR HOTSPOTS TOP 5 MARKET HOTSPOTS
SUCCESSION PLAN 1 Financial services 49% 1 Netherlands 64%
1 Ownership will pass 48%
2 Switzerland 63%
to a family member 2 Transport and logistics 49%
2 Ownership will pass 38%
3 Singapore 58%
to the management
team
3 Professional services 49%
(e.g. medical, legal)
3 Ownership will pass 14% 4 Italy 55%
to a new owner 4 Manufacturing and 47%
engineering
5 Turkey 54%
5 Retail and culture 44%
FUTURE BUSINESS INVESTMENTS
6 IT and digital 42%
technology
1 Marketing 40%
2 Customer experience 38% SUCCESSION ADVICE
(e.g. website)
1 Advice on how to 44% 5 Wealth management 34%
3 Sales and distribution 35%
prepare future leaders after the transfer or
for senior leadership sale of my business
4 Product design 35% responsibilities
6 Putting in place 31%
2 Advice on the correct 40% a family governance
5 Product manufacturing 30% valuation of the
business
code for the next
generation of leaders
6 Finance (e.g. 29% 3 Support finding people 40% 7 Facilitation during 31%
accounting, payments) with the right skills and meetings to smooth
experience to manage the transfer
7 Mobile communications 26%
the business
4 Advice on structuring 38%
the transfer to optimise
tax efficiency
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
13FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
4
STAGE
CONSOLIDATION
PROFILING DEEP-DIVE
Population
12% of Elite Entrepreneurs aged 55 and over are in
107 Elite
Entrepreneurs the ‘Consolidation’ stage of the business lifecycle, compared to only
(4% of total sample) 3% of business owners aged 35 or under.
And in terms of future succession, only 37% of entrepreneurs
Average age
47 years old preparing for business exit this year intend to transfer ownership to
a family member, compared with 62% of ‘Creation’ stage business
Average Company owners.
Revenue in 2017
USD5.8 million
PLANNING FOR BUSINESS EXIT TOP 5 MARKET HOTSPOTS
SUCCESSION PLAN 1 Identifying the right 41% 1 Brazil 7%
time to sell my business
1 Ownership will pass 37%
2 Spain 7%
to a family member 2 Putting a plan in place 41%
to protect my wealth
2 Ownership will pass 34%
3 United States 7%
to the management
team
3 Putting a plan in place 39%
to safeguard my
3 Ownership will pass 29% family’s future 4 Taiwan 6%
to a new owner
4 Forming a precise 31%
understanding of the 5 Germany 6%
value of my company
5 Refinancing my 20%
business to improve its
FUTURE BUSINESS INVESTMENTS financial performance
1 Marketing 44% 6 Restructuring my 19%
business to improve
its competitiveness
2 Sales and distribution 33%
SUCCESSION ADVICE
3 Finance (e.g. 26%
accounting, payments) 1 Advice on how to 37% 5 Support finding people 27%
prepare future leaders with the right skills
4 Customer experience 24% for senior leadership and experience to
(e.g. website) responsibilities manage the business
5 Product manufacturing 22% 2 Advice on the correct 37% 6 Advice on structuring 26%
valuation of the the transfer to
business optimise tax efficiency
6 Product design 18%
3 Wealth management 31% 7 Putting in place a 21%
after the transfer or family governance
sale of my business code for the next
7 Mobile communications 9%
generation of leaders
4 Facilitation during 28%
meetings to smooth
the transfer
Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
145
STAGE
TRANSFER
PROFILING DEEP-DIVE
Population
72% of entrepreneurs at the ‘Transfer’ stage of the business lifecycle
90 Elite
Entrepreneurs are aged 55 and over.
(3% of total sample)
Only 37% of ‘Transfer’ stage entrepreneurs would transfer
their primary business to a family member at the point of succession,
Average age
61 years old compared to 62% of ‘Creation’ stage business owners.
Average Company
And in terms of succession advice, the majority of business owners
Revenue in 2017 (44%) planning to exit their business this year require support
USD16.5 million sourcing the right talent with the skills needed to manage the
business in the future.
SUCCESSION PLAN
AGE PROFILE TOP 5 MARKET HOTSPOTS
1 Ownership will pass 37%
to a family member 1 55 and over 72% 1 United States 13%
2 Ownership will pass 22%
to the management 2 36 to 54 26% 2 United Kingdom 6%
team
3 Ownership will pass 41% 3 35 and under 2% 3 Switzerland 4%
to a new owner
4 Netherlands 3%
5 Germany 3%
SUCCESSION ADVICE
1 Support finding people 44% 5 Wealth management 15%
with the right skills and after the transfer or
experience to manage sale of my business
the business
6 Putting in place 11%
2 Advice on the 33% a family governance
correct valuation code for the next
of the business generation of leaders
3 Advice on structuring 22% 7 Facilitation during 7%
the transfer to optimise meetings to smooth
tax efficiency the transfer
4 Advice on how to 15%
prepare future leaders
for senior leadership
responsibilities
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
15FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
1
STAGE
CREATION
How businesses begin
During their time at the helm of their businesses, entrepreneurs’ goals go through a
profound transformation.
Initially, many decide to start their companies because they have a pioneering
concept they want to commercialize and go it alone or join the family firm to enact
their plans. As their ideas take off and their businesses mature, they start to think
less about sales and more about sustainable growth in the form of profits. At the
point when their companies are standing on a secure foundation, they may be enticed
to sell, transfer ownership or even seek a public listing, before moving on to new
endeavors.
Almost
half
Almost half of the entrepreneurs in our
research audience are running businesses
still in their foundation years [Figure 1].
17% are in the ‘Creation’ phase where their of the entrepreneurs in
commercial objective for 2018 is simply to our research audience are
launch their product or service. Just under a running businesses still
third (30%) are in the ‘Growth’ stage during in their foundation years.
which increasing sales is critical.
Just under half (46%) are leading more
mature businesses in ‘Development’, where the priority has shifted from revenues
to improving profits and productivity. The remainder are either preparing for (or in
the process of) exit.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
16FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
When thinking about your primary company, which of the following statements
best sums up your main business objective for 2018?
3%
TRANSFER
Exit (e.g. through a sale, public
listing or transfer of ownership 17%
to the next generation) / Other CREATION
Launch of a new
4% product, concept or
service line
CONSOLIDATION
Consolidate and prepare for exit
(e.g. prepare the business
for sale or transfer)
30%
GROWTH
Growth of revenues /
sales relative to last
year
46%
DEVELOPMENT
Increased profitability relative to last
year / Improved efficiency or
productivity
[ F I G U R E 1 ] STAGES OF THE LIFECYCLE
N = 2,763 / Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
18Ultra-high net worth (UHNW) business owners are particularly drawn to the
excitement of the initial stages of entrepreneurship. Almost 60% are running
companies in ‘Creation’ or ‘Growth’ where their main objective is to establish a
viable business model for their current venture.
Known for its rapid project lifecycles and for inventing agile working practices, it is
no surprise that the Technology sector has the highest concentration of dynamic
‘Creation’ businesses that aim to get new products to market quickly [Figure 2].
In contrast, half of entrepreneurs running financial services companies (including
accountancy and payments) are now able to focus mostly on gaining ground on profit
and efficiency.
In which of the following sectors does your primary business operate?
Creation Growth Development Consolidation Transfer
FINANCIAL 13% 26% 49% 8% 4%
SERVICES
(N = 234)
IT AND DIGITAL 25% 30% 42% 2% 1%
TECHNOLOGY
(N = 520)
MANUFACTURING 15% 33% 47% 3% 2%
AND ENGINEERING
(N = 833)
PROFESSIONAL 13% 30% 48% 5% 4%
SERVICES*
(N = 367)
RETAIL 17% 30% 44% 4% 5%
AND CULTURE
(N = 402)
TRANSPORT 17% 31% 49% 3% 0%
AND LOGISTICS
(N = 228)
[ F I G U R E 2 ] MAPPING ENTREPRENEURIAL SECTORS AGAINST THE LIFECYCLE
Source: 2019 BNP Paribas Global Entrepreneur Report
* e.g. medical, legal
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
19FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
Disruption predictor
The entrepreneurial obsession with spear-heading innovation through new products
and services is ingrained in their DNA, visible across the world and in all generations.
Yet there are some who approach the question of innovation differently; who want to
disrupt rather than contribute to incremental developments.
Just under a quarter (24%) of our research audience can be categorized as
‘Disruptors’ – individuals whose business goal is within five years to permanently
change the status quo with a new product or concept. Despite the attention usually
given to Millennials, Disruptors are actually slightly older, at 39 on average, and have
correspondingly more business experience under their belts.
They are driven by their unique mind-set rather than by their environment, and so
can be found across all regions and running businesses in diverse sectors. In Belgium,
as many as 40% say that disruption is their business goal, with entrepreneurs in
Taiwan (38%) and the Netherlands (36%) expressing similar views [Figure 3].
In five years’ time, what would you like to have achieved through your primary business?
Rank Location of primary business
1 BELGIUM (N = 81) 40%
2 TAIWAN (N = 77) 38%
3 NETHERLANDS (N = 85) 36%
4 SWITZERLAND (N = 76) 34%
5 BRAZIL (N = 93) 33%
6 INDIA (N = 106) 30%
7 HONG KONG (N = 154) 30%
8 RUSSIA (N = 50) 28%
9 INDONESIA (N = 79) 28%
10 SPAIN (N = 109) 28%
[ F I G U R E 3 ] DISRUPTION HOTSPOT MAP
N = 2,692 [ANSWERED: ‘Developed a product that disrupts my chosen sector’]
Sectors with fewer than 50 responses have been removed.
Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
20New industries are being transformed each year by digital developments and a
growing consumer appetite to participate in the sharing economy. Disruptors envision
the same happening one day in their own sectors [Figure 4]. Entrepreneurs running
businesses in Online, Mobile and Digital, Engineering and Manufacturing are most
likely to believe that they will one day pioneer that change, but for now all bets are
off as to who will get there first.
In five years’ time, what would you like to have achieved through your primary business?
Rank Sector of primary business
1 ONLINE, MOBILE & DIGITAL* (N = 143) 34%
2 ENGINEERING (N = 147) 31%
3 MANUFACTURING (N = 301) 30%
4 ENERGY, OIL & GAS (N = 65) 29%
5 TRANSPORT, LOGISTICS & STORAGE (N = 107) 28%
6 INFORMATION TECHNOLOGY (N = 373) 27%
7 RETAIL (N = 301) 27%
8 CONSTRUCTION & BUILDING SERVICES (N = 197) 25%
9 MEDICAL & DENTAL (N = 73) 25%
10 EDUCATION (N = 92) 23%
[ F I G U R E 4 ] SECTORS WHERE DISRUPTORS RUN BUSINESSES
* software development
Sectors with fewer than 50 responses have been removed.
N = 2,692 [ANSWERED: ‘Developed a product that disrupts my chosen sector’]
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
21FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
2
STAGE
GROWTH
Reaching a crossroads: merger
or acquisition?
No entrepreneurial journey is the same as another, nor are the growth stories
of any two firms. During the second stage of the lifecycle, entrepreneurs – who
have worked hard to create businesses with distinct identities and in many cases
carefully preserved multi-generational family heritage – may end up at a crossroads.
For commercial reasons, they will face a decision to merge with another firm or be
acquired.
The implications for business success could be transformational and crystallize
growth ambitions; yet the impact on culture and brand are uncertain and therefore
not without risks.
Faced with that choice,
most entrepreneurs are hard-wired
to take any opportunity that
could catapult their businesses
to new heights.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
22FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
56% of our respondents have already been through the M&A process with one of their
firms. Memories are fresh as these experiences have mostly taken place within the
last five years.
Those who agreed to an acquisition were usually motivated by the chance to grow
market share or access new markets, while those who consented to a merger had
similar aspirations and sought to diversify [Figure 5].
Their insights illuminate important considerations for their peers who are yet to go
down one of these paths. Naturally, professional guidance was vital to ensure the
transaction could be financed and completed. However, upon reflection, their most
valued source of advice did not relate to execution of the deal.
Over
50%
of entrepreneurs who have
had an M&A experience say
that professional support
for devising their business
strategy, and having the
right team in place, were
both vital.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
24Have any of the businesses you’ve owned in the past, or businesses you currently own, been
through a merger or acquisition?
Grow Access Diversify Reduce Remove
market new my the cost the threat of
share markets business base a competitor
Yes - one of my businesses 29% 26% 26% 11% 8%
was acquired in the past
five years (26%)
APAC 33% 19% 23% 15% 10%
EUROPE 29% 28% 24% 11% 8%
GCC 33% 39% 11% 17% 0%
USA 25% 29% 31% 6% 9%
Yes - one of my businesses 31% 22% 27% 11% 9%
merged with another business
in the past five years (24%)
APAC 33% 18% 28% 12% 9%
EUROPE 27% 26% 26% 12% 9%
GCC 31% 26% 11% 21% 11%
USA 36% 22% 22% 4% 16%
Yes - one of my businesses 29% 24% 29% 10% 8%
was acquired more than
five years ago (16%)
Yes - one of my businesses 30% 23% 27% 11% 9%
merged with another business
more than five years ago (9%)
[ F I G U R E 5 ] TRIGGERS FOR M&A ACTIVITY
Not all responses shown. The chart above only shows responses from those who answered that their businesses had been acquired or merged.
N = 1,535 / Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
25FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
3
STAGE
DEVELOPMENT
The road to 2023
The question ‘Where do you see yourself in five years’ time?’ is frequently posed
and difficult to answer. Succinct and simple, it forces individuals to hone in on their
hoped-for achievements and commit to a definition for future career success.
Imagine how much more difficult it is for people who are already successfully running
their own businesses to give their response. Entrepreneurs play multiple roles
every day: they are leaders of their workforce, problem-solvers for their clients and
visionaries in their industries. They are responsible for their employees and families,
and accountable to their shareholders.
Ask them to choose, however, and they come to a clear conclusion. In five years’ time,
entrepreneurs’ primary business objective is to have contributed to innovation and
development of their chosen sector [Figure 6]. Just over a third (36%) highlight this
as a critical success metric. With one eye looking ahead, another third intend to have
built a network that will support new commercial ventures.
In five years’ time, entrepreneurs’
primary business objective is to
have contributed to innovation and
development of their chosen sector.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
26FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
In five years’ time, what would you like to have achieved through your primary business?
BUSINESS GOALS OVERALL (N = 2,692) 35 and under (N = 1,033)
36 to 54 (N = 1,413) 55 and over (N = 246)
0% 10% 20% 30%
Contributed to innovation and development 36%
in my chosen sector
Contributed to the economic growth 30%
of the domestic market
Recognition of my firm as an industry 27%
leader (e.g. through awards)
Overtake the current market leaders 24%
in my chosen sector
Recognition of my firm as a thought leader 24%
Developed a product that disrupts my chosen 24%
sector
CAREER GOALS OVERALL (N = 2,692) 35 and under (N = 1,033)
36 to 54 (N = 1,413) 55 and over (N = 246)
0% 10% 20% 30%
32%
Built a professional network that
can support my next venture
27%
Enabled the careers of talented individuals
28%
Enabled the careers of the next generation
of my family
26%
Enough money to step back
or even exit my business
23%
Personal recognition for myself
as an industry leader
[ F I G U R E 6 ] ENTREPRENEURS’ FIVE-YEAR VISION FOR THEIR BUSINESSES
Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
28Each entrepreneur has their unique lens on what constitutes a worthwhile
achievement. Some focus on contributing to growth of the local economy, which is
important to more than 40% of those based in Indonesia, the Netherlands and Brazil.
Others are striving to gain personal recognition as award-winners and thought
leaders: this is the prism through which success is viewed in the GCC. The
entrepreneurial ambition in India, Germany and Switzerland is for the next
generation of their families to have meaningful careers.
Millennials are the first ‘digitally native’ generation, so it is no surprise that they
measure themselves primarily on their contribution to innovation in their sector; but
they are also motivated by the career potential offered by entrepreneurship. Although
they are young, many are anticipating that the network they build will springboard
their next business.
Meanwhile, the oldest generation of entrepreneurs – those aged 55 and over – are
mostly interested in attaining financial security. They are in the final stretch of their
careers and envision being able to step back from their responsibilities to enjoy their
wealth and free time. Like their younger counterparts, many hope to make their mark
on their sector but even more want simply to have enough money to retire.
Their attitudes contrast sharply with those who, arguably, have it all – those worth
USD25 million and over. Stepping back barely registers with ultra-high net worth
entrepreneurs. Instead, their ambitions are chiefly to develop their sectors and
generate growth – and support the professional development of the talented people
who work for them.
Stepping back barely
registers with ultra-high
net worth entrepreneurs.
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
29FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
The investments into their businesses
The technology revolution has opened up possibilities for entrepreneurship that
would have been inconceivable just two decades ago. Most entrepreneurs are
committed to continuing that advancement: in Part I of the 2019 BNP Paribas Global
Entrepreneur Report, we uncovered that 55% of business owners have technology
investments and see it as their number one growth sector for the future. For them,
digital is ubiquitous and underpins all their commercial activities.
They also know that they will need to invest in their own businesses if they are
to be perfectly positioned to take advantage of coming changes. With agile new
competitors arriving on the scene, the primary focus for entrepreneurs is ensuring
brand and product differentiation [Figure 7].
More than a third of entrepreneurs say most of the
investments they have planned over the next two years
For entrepreneurs in the
relate to marketing, sales and distribution. ‘Development’ phase, where
In Asia, product design is the priority with 44% focused on
improving profit margins
this – the highest of any region and particularly evident and productivity is critical,
in China, Taiwan and Hong Kong. Over the next two years, automation is the most
those in Singapore will prioritize sales and distribution
important advantage.
while entrepreneurs in the GCC are most committed to
future-proofing the product manufacturing process.
The immediate investment focus in Europe (particularly for the Netherlands, Belgium,
Luxembourg, France and Switzerland), and the US, is building out marketing. When
it comes to attaining their goals, those in the Netherlands, Poland, Spain and Turkey
will introduce more automation to their processes.
Few will take the risk of being complacent in this increasingly competitive
environment, so even entrepreneurs running businesses in the most technologically-
advanced industries are investing now to prepare for the future.
For example, entrepreneurs from the IT sector are bringing new advances to their
customer experience; engineering firms are considering whether their product
lifecycle could benefit from more efficient design and manufacturing; and those
working in finance are actively improving payments and accounting processes.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
30Entrepreneurs at the earliest stages of the business lifecycle are most optimistic
about the transformations digital will bring. Asked to project the impact on their
sectors, those at the ‘Creation’ stage point enthusiastically to the chance to interact
more frequently through virtual means with potential clients as they launch new
products.
For entrepreneurs in the ‘Development’ phase, where improving profit margins
and productivity is critical, automation is the most important advantage [Figure 8].
At this point, business owners believe technology will help them strip out the
inefficiency of manual processes.
Over the next two years, where will the majority of your future business
investments be focused?
Overall (N = 2,692) Europe (N = 1,371) USA (N = 351)
APAC (N = 820) GCC (N = 57)
0% 10% 20% 30% 40%
39%
Marketing
36%
Sales and distribution
35%
Customer experience (e.g. website)
34%
Product design
30%
Product manufacturing
27%
Finance (e.g. accounting, payments)
24%
Mobile communications
[ F I G U R E 7 ] BUSINESS INVESTMENTS OVER THE NEXT TWO YEARS
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
31FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
What steps do you plan to take in the next five years to help you achieve those goals?
Overall (N = 2,692) Creation (N = 460) Growth (N = 844)
Development (N = 1,262) Consolidation (N = 90) Transfer (N = 36)
0% 10% 20% 30%
35%
Marketing and brand development
35%
Research and development
31%
Expansion of my business into (a) new sector(s)
29%
Recruit technically-skilled workforce
28%
Secure funding for the continued growth or expansion
of my business
26%
Find new business partners
24%
Recruit senior professionals
23%
Prepare the next generation of my family for their new
business responsibilities
22%
Automation
21%
Online distribution
[ F I G U R E 8 ] BUSINESS INVESTMENTS ACROSS THE LIFECYCLE
Source: 2019 BNP Paribas Global Entrepreneur Report
Securing credit to drive development
During the ‘Development’ phase, the primary goal is to improve business performance
by investing in changes that impact productivity and profit. At this point, many seek
support from a financial institution; in fact, ‘Development’ stage entrepreneurs are
more likely to take out credit to finance their businesses than those at any other
stage of the lifecycle.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
32In Asia, 55% of entrepreneurs have sought to borrow to invest in their own businesses
[Figure 9]. This rises to more than six in every ten business owners in China, India
and Indonesia. In the mind of the entrepreneur, the opportunities offered by these
solutions are clear and they are comfortable using credit to simultaneously achieve
personal objectives, including diversifying their investment
portfolios (45%) and fulfilling short-term funding requirements
In Asia, 55% (41%).
of entrepreneurs have
In Europe, entrepreneurs rely on credit solutions to purchase a
sought to borrow new asset (for example, real estate), which half of them have done
to invest in their own at some point. However, many also depend on these solutions for
businesses. business financing, in particular in the Netherlands, the UK and
Switzerland.
What has motivated you in the past to take out credit or lending products?
Overall (N = 2,214) Europe (N = 1,171) USA (N = 267)
APAC (N = 665) GCC (N = 49)
0% 10% 20% 30% 40% 50%
48%
Purchasing a new asset (e.g. real estate)
44%
Requiring financial support for my business
37%
Diversifying my investment portfolio through
new financial products
36%
Personal requirement for short-term funding
33%
Mortgage to buy my primary property
19%
Purchase of a luxury item (e.g. yacht, jet, fine art)
[ F I G U R E 9 ] ENTREPRENEURIAL USE OF CREDIT SOLUTIONS
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
33FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
4
STAGE
CONSOLIDATION
Timing is everything
For almost 7% of entrepreneurs globally, the difficult decision on the horizon is
choosing when to exit their business. While they only form a small proportion of our
research audience today, all business owners will one day face the same question of
whether they want to continue leading the firm they’ve worked hard to build up. If
the answer is no, they need to know how to prepare for what comes next.
These considerations are front of mind for the Baby
Boomer generation, more than one in three of whom is
Their main concerns
intending to exit this year. Many are already going through
the process of either finalizing a sale or transferring are finding the right time
ownership, while others are hoping to step back within 12 to sell and implementing
months. As a result, a quarter of the older generation are a strategy that
actively preparing the next generation to take the reins
from them.
will safeguard their
personal wealth.
Those planning their imminent departure are already
thinking about how to protect their financial interests after
they have left behind entrepreneurial life. Their main concerns are finding the right
time to sell and implementing a strategy that will safeguard their personal wealth
[Figure 10]. Timing is everything in business, but to end on a high, entrepreneurs
know they also need a robust plan in place.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
34You mentioned that you are preparing for business exit this year.
Which of the following activities will form part of your preparation?
41% 31%
Putting a plan in place Forming a precise understanding
to protect my wealth of the value of my company
41% 20%
Refinancing my
Identifying the right time
business to improve its
to sell my business
financial performance
39% 19%
Restructuring my
Putting a plan in place
business to improve
to safeguard my family’s future
its competitiveness
[ F I G U R E 1 0 ] PREPARING FOR EXIT
N = 107 / Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
35FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
5
STAGE
TRANSFER
Keeping it in the family
As entrepreneurs’ firms start to move into the ‘Consolidation’ and ‘Transfer’ phases
of the lifecycle, their minds will turn more often to whom ownership of their firm
should pass. Some will start to consider a solution that is close to home: ‘keeping it
in the family’ is an intuitive decision for those who want the best for their firms and
their staff yet are wary of selling to an external buyer that may adopt a diametrically
opposed strategy.
This approach is strongly endorsed by this year’s research audience, where just over
half (51%) say their eventual plan is to transfer ownership of their primary business
to a relative. In Europe, entrepreneurs in Russia, Poland, Italy, Germany and France
are most convinced that this is the right approach for their businesses.
Only 14% anticipate selling to a new owner, with a further third intending a
management buy-out.
51%
There are distinct and highly pragmatic
motivations underlying the preference for
family involvement. Nearly half (45%) of high
net worth entrepreneurs believe their relatives of entrepreneurs say
will safeguard the financial value of their firm. their eventual plan is
Millennials are the most likely of the different to transfer ownership of
generations to hold this view. their primary business
In some parts of Asia, there are often powerful to a relative.
emotions at play. For instance, in Hong Kong,
44% of those intending to pass on their business to a family member say they will do
it primarily because ‘it is their duty’. In Singapore, the main objective is to preserve
family values in future business activities.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
36FROM IDE ATION TO IP O – THE BUSINESS L IFECYCL E
Further up the wealth scale, the picture looks a little different. The most successful
entrepreneurs – worth more than USD25 million – plan to go down this path because
they believe their relatives are well-suited to the task of management. 51% are
convinced that the next generation of their family are the right people to lead the
firm on to new successes [Figure 11].
In reality, transferring ownership of the firm to a family member is not a silver
bullet. As business owners build their professional networks, more options open
up, causing their preferences to evolve. Almost two thirds (62%) of early-stage
entrepreneurs believe their families should take over their firms one day, yet only
slightly more than a third feel the same when they come to the point of transfer
[Figure 12]. By that point, most entrepreneurs have decided that either a buy-out by
the management team or a sale is a better route forward.
You mentioned that you plan to transfer ownership of your primary business to a family
member. What are the reasons for this?
OVERALL (N = 1,362) USD10-25 mn (N = 131)
USD5-10 mn (N = 192) USD25 mn and over (N = 65)
0% 10% 20% 30% 40%
45%
To safeguard the financial value
44%
The next generation are the right people
to develop the business
38%
To preserve the core values of the business
36%
It is the most tax efficient way
33%
I believe it’s my duty
21%
I am not willing to sell my business
[ F I G U R E 1 1 ] MOTIVATIONS FOR BUSINESS TRANSFER TO A FAMILY MEMBER
Source: 2019 BNP Paribas Global Entrepreneur Report
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
3862%
of early-stage entrepreneurs
believe their families should
take over their firms one
day, yet only slightly more
than a third feel the same
when they come to the point
of transfer.
Thinking about the long-term future of your primary business, which of the following
scenarii best reflects your intentions?
BUSINESS LIFECYCLE
Ownership of my primary business will most likely pass to a family member (e.g. donation)
Ownership of my primary business will most likely pass to the management team (e.g. buyout)
Ownership of my primary business will most likely pass to a new owner (e.g. sales)
62%
51% 50%
48%
41%
38% 37% 37%
35% 36%
34%
29% 29%
22%
14% 14% 14%
9%
Overall Creation Growth Development Consolidation Transfer
(N = 2,683) (N = 460) (N = 844) (N = 1,262) (N = 90) (N = 27)
[ F I G U R E 1 2 ] BUSINESS TRANSFER INTENTIONS AT DIFFERENT STAGES
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
39SECTION 2
THE
SUCCESSION
QUESTIONTHE SUCCESSION QUESTION
MAKING WAY
FOR THE NEXT
GENERATION
47%
of entrepreneurs
are confident the next
generation are ready right
now to take on the mantle
of leadership.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
42BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
43THE SUCCESSION QUESTION
Only one in
Although they have spent years building their
three entrepreneurs believe
companies around their own leadership style and their identified successors
vision, most entrepreneurs know that it is vital one day are fully ready to step up
that the reins are handed on to the next generation.
to that challenge.
Their successors – whether a daughter or son, or
ambitious individual they have coached through their
career – will bring fresh ideas that ensure their businesses can adapt to emerging
challenges. The question in their minds is not just whom to entrust with that role,
but how to manage succession preparation so that it serves the interests of both the
business and its founder.
The end-game is starting to formulate in their own minds, but entrepreneurs have
serious misgivings about relinquishing control. In their most honest moments, they
understand that their business successors have a significant amount of learning
to do before they are ready for the responsibility of running a company, being a
good employer and delivering shareholder value. Right now, only one in three
entrepreneurs believe their identified successors are fully ready to step up to that
challenge, while a majority (53%) feel that more guidance and training is required
[Figure 13].
The uncertainty ahead is most pressing for entrepreneurs intending one day to
transfer ownership outside the family through a sale or buy-out. Only a fifth (21%)
feel the next leadership team is ready. Perhaps there are questions over whether the
individuals they want to run the show would successfully adapt to a new culture or
ownership structure.
It is slightly less daunting for those who intend one day for their close relatives
to be appointed to the Board – 47% of these entrepreneurs are confident the next
generation are ready right now to take on the mantle of leadership. However, that
still leaves many heads of family businesses all over the world grappling with their
worries about stepping back.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
44How ready are the next generation of leaders in your primary business to take
on management responsibilities?
The next generation of leaders are fully prepared to take on business management
The next generation of leaders need some more guidance and support before they are ready to take on business management
The next generation of leaders need a lot more guidance and support before they are ready to take on business management
As yet, there is no obvious successor(s) in my primary business
Next generation requiring guidance and support
5%
8%
47%
48% INTENTION TO TRANSFER
OWNERSHIP TO A FAMILY MEMBER
13%
(N = 1,362)
40%
10% 34%
53%
20%
21%
43%
OVERALL
(N = 2,683) 59%
INTENTION TO TRANSFER
58%
13% OWNERSHIP OUTSIDE THE FAMILY
(N = 1,321)
46%
[ F I G U R E 1 3 ] CONFIDENCE IN THE NEXT GENERATION OF LEADERS TAKING CHARGE
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
45THE SUCCESSION QUESTION
IN CONVERSATION WITH
MARTINE REYNAERS
MARTINE REYNAERS
Managing Director @Reynaers Group
Established in 1965 and with its
headquarters in Duffel, Belgium, the
Reynaers Group is a global, family-
owned company, active in more than
70 countries worldwide
www.reynaers.com
‘We are inspired by younger family members to make
a legacy and to safeguard the company spirit for
future generations.’
Martine Reynaers has been CEO of Reynaers Aluminium (the global leader in aluminium
solutions for the building sector) since 1986. At the beginning of 2018, Forster Profilsysteme
joined the group, extending the activities to steel solutions for the building industry. The
company is headquartered in Belgium, has an annual turnover of around 500 million Euros
and employs 2,200 people.
Reynaers Aluminium has been through several distinct stages in its growth story to attain
the success it enjoys today. Ms. Reynaers says: ‘I’ve been managing the company for more
than 30 years and have overseen its development alongside the Board, the shareholders, the
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
46employees – and thanks to our customers. Earlier, we were very focussed on Belgium and the
Netherlands; then, we bought a company in Ireland that was operating in another industry and
was international. From there, we started developing the company into Germany and France.
We were fortunate to be one of the first active players in our sector in Eastern Europe, going
into Ukraine and Russia, and from there to Asia, the Middle East and US.’
She credits the consistent focus on product innovation as critical to the firm’s expansion into
overseas markets. ‘We didn’t feel that sending out Belgians worldwide would be the right
approach. Instead, we always tried to work with local people as much as possible, which meant
building strong in-country teams and adjusting to local market expectations of design, security
and safety, as well as competitive pricing on logistics, quality and pricing.’
Commenting on her personal path to join the family business, Ms. Reynaers says: ‘I am second
generation but sadly my father died very young, so I was never able to work with him. By the
time I joined the company, we already had an outside management team and of course I learned
a lot from them. Today, we maintain that mix of family and external Directors on our Board.
I also continue to be active in many associations: it is so important to learn from other CEOs.’
She believes that the firm’s focus on innovation has laid a strong foundation for the future. ‘By
definition, the future is not certain, so you cannot ‘future-proof’ a business. However, you can
do everything possible to improve agility in the face of unexpected situations. We invest in our
buildings, our equipment and our software. Innovation is very important because we sell our
products at a premium price, so we need to continue to grow customer value. We have an R&D
department and collaborate with universities, engineering consultancies and software houses
to stay ahead of market trends.’
She sees the next generation as vital to bringing forward new ideas: younger family members
are already actively involved in the governance structure of the firm.
Ms. Reynaers continues: ‘It has been great to see them so interested in the business. We have
joined a family business network, an active association that allows them to network and learn
from other ‘Next Gen’ peers. We are inspired by younger family members to make a legacy and
to safeguard the company spirit for future generations.’
Her advice to the next generation of leaders in the firm? ‘It is very important to communicate
and to be able to listen carefully, to be humble. Be collaborative when developing a clear
strategic decision. At the same time, avoid becoming immobile. If there are indications that
you are heading in the wrong direction, take the time to listen to that advice and then make
the decision to go left, or right.’
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
47THE SUCCESSION QUESTION
A BLENDED
APPROACH
TO LEADERSHIP
PREPARATION
44%
say that it is very important that
the next generation participates
in a succession plan devised
by a wealth manager.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
48BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
49THE SUCCESSION QUESTION
In entrepreneurs’
minds, the best leadership
Ensuring a smooth business succession between different preparation is less likely
generations is critical to preserving the hard-earned
gains made by those in the past. Today’s business owners
to be found in textbooks
understand that they must play a proactive role now in than in hard graft.
preparing the future executive team for the pressures they
will face.
In entrepreneurs’ minds, the best leadership preparation is less likely to be found
in textbooks than in hard graft. They strongly believe that hands-on experience of
working for the business provides the most effective training [Figure 14].
In fact, practical experience is viewed as more important than offering prescriptive
guidance on how to manage company finances, handle client relationships or
negotiate with suppliers. Entrepreneurs from countries as diverse as Brazil, the US,
Belgium and China agree that the next generation must first immerse themselves in
the culture of the firm before they can be considered ready to lead.
At the same time, most do feel it is important to balance learned experiences with
formal guidance. For example, 44% say that it is very important that the next
generation participates in a succession plan devised by a wealth manager. This
rises to a majority (61%) of those running businesses in China, where management
buy-outs are the preference. As they start to seriously consider succession, they
realize that a structured approach to leadership preparation would ensure all bases
are covered.
BN P PA RI BA S E NTRE PRE N E U R RE PORT / 2019 / PART II
50How important are each of the following in preparing the next generation for business transfer?
Very important Important Not important
PRACTICAL EXPERIENCE
OF HOW THE BUSINESS OPERATES
79% 76% 76%
71%
66%
54%
42% 18% 22%
33%
4% 3% 27% 2% 24% 6%
1% 1%
Overall (N = 1,769) Luxembourg (N = 34) Belgium (N = 72) Brazil (N = 51) Russia (N = 34) China (N = 218)
GUIDANCE ON FINANCIAL
MANAGEMENT
68% 65% 61% 59% 58%
48% 46%
38% 35% 39%
6% 6% 31% 6%
26% 4% 1% 3%
Overall (N = 1,769) Luxembourg (N = 34) Brazil (N = 51) China (N = 218) Russia (N = 34) India (N = 66)
EDUCATION ON BUSINESS SUCCESSION
FROM PROFESSIONAL ADVISORS
59% 59% 59% 58% 56%
49%
43% 39% 39%
36% 36% 35%
8% 5% 5% 9%
2% 3%
Overall (N = 1,769) India (N = 66) Poland (N = 39) Brazil (N = 51) Belgium (N = 72) Russia (N = 34)
PARTICIPATION IN A SUCCESSION PLAN
PUT TOGETHER BY MY WEALTH MANAGER
61% 57% 56% 56% 56%
44% 48%
39% 43%
36% 10% 35%
8% 33% 5% 9%
3% 1%
Overall (N = 1,769) China (N = 218) Brazil (N = 51) India (N = 66) Luxembourg (N = 34) Netherlands (N = 70)
[ F I G U R E 1 4 ] ENTREPRENEURS PREPARE THE NEXT GENERATION FOR THEIR RESPONSIBILITIES
Source: 2019 BNP Paribas Global Entrepreneur Report
BNP PA RI BA S E N T RE PRE N E U R RE PORT / 2019 / PART II
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